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Enterprise

Dell’s EMC Bet Looking Shaky

When Michael Dell bought EMC a year ago for $67 billion, he was betting he could defy the shift towards public cloud services like Amazon Web Services that’s eroding sales of older hardware like EMC’s data storage equipment. He hoped to sell Dell’s servers with EMC’s equipment and dominate the market for traditional hardware through what is the biggest private tech company in the world.

So far, the bet is looking distinctly shaky. EMC’s storage sales continued to decline through the past year, prompting Dell to ramp up cost-cutting through layoffs, discontinuing certain products and capping sales commissions, say two former EMC sales executives. The cost-cutting has sapped morale, said former and current Dell Technologies employees. S&P said last month that profits in the most recent quarter were lower than it expected. 

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Dell, whose business is rooted in the PC world, has traditionally run a tight ship, with a business model focused on closing sales deals quickly and making money on razor-thin margins.